Robert F. Graboyes

Robert F. Graboyes

Robert F. Graboyes is the senior health care adviser at the National Federation of Independent Business (NFIB) in Washington, D.C.

Rein Costs In or They'll Rein Us In

The Blue Dogs are right to worry about costs -- it's the No.1 worry for small business. If we don't rein in costs, costs will rein us in. Wages, profits, jobs and governments are sinking under swelling costs. The trend isn't sustainable. If we don't slow the growth, like housing prices, health-care price growth will eventually slow itself on top of our heads. For small business, where problems are most immediate and acute, reform requires better insurance markets and delivery systems.

The small business wish-list includes: Larger risk pools. Functioning insurance markets with competing private insurers. Insurance exchanges expediting transparency and transactions. Voluntary employer defined contributions. Information technology disseminating cost and outcomes information. Affordable benefit design options including consumer-driven health plans.

Small business and others need rational reimbursement and delivery systems to drive costs down. Medicare's fee-for-service structure should be scrapped so payments reward doctors for producing health, not for poking and cutting. Other reforms might include: Comparative effectiveness without government micromanagement. Coordinated care like Mayo or Geisinger. Consumer-friendly venues like Minute Clinics. Drug re-importation. Administrative simplification for providers and consumers.

It is only politically possible to rein in costs if we shed two surreal arguments: (1) Stop arguing that broader benefits (more coverage, more prevention, more technology) will lower costs. There may be lots of reasons to do these things, but they don't tend to cut costs. (2) Stop arguing that mandates to spend money will save money. One line I often hear is: "Force small business to buy insurance or pay massive payroll taxes and this will save small business money." I've seen this logic elsewhere - in emails pleading: "Kind Sir, if you will simply deposit $12,000 in my bank account, I guarantee my late husband's bank will transfer $1,200,000 to your account within seven days."

By Robert F. Graboyes  |  July 24, 2009; 1:33 PM ET  | Category:  Health costs Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
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"In fact, only 8.9 percent of people with any small business income have incomes of over $250,000 and, thus, would even potentially be affected by these provisions."

From the CBPP -

Posted by: lensch | July 28, 2009 3:06 PM
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You say, "Your first paragraph is a string of easily disputable, out-of-context non sequiturs followed by a straw man and a question mark. ... "

So why didn't you dispute them, identify the staw man and answer the question?

If you don't believe Uwe's computations, say which of his assumptions you doubt or fault his math. I especially wonder where you got the word "uncontrollably" from his careful posting.

Posted by: lensch | July 28, 2009 12:54 PM
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Lensch ... ... Last message from me. Your first paragraph is a string of easily disputable, out-of-context non sequiturs followed by a straw man and a question mark. ... On your second point: My comments on Medicare are all easily documented and not particularly controversial. You quote Reinhardt's cheeky blog post, but it doesn't refute anything. Let me strip the jargon out of it and restate Reinhardt's argument in 26 words: "Medicare can spend uncontrollably forever because people in 2050 will be so rich that they won’t mind paying the gargantuan obligations their spendthrift forebears left them." Fine if one agrees, but not an assumption I’m willing to bet on.

P.S. In commenting on my message last week ("Should We Tax the Rich to Cover the Uninsured?") your discussion of U.S. tax law was incorrect for any firm with multi-year production, investment, or cash flow. I’ve posted an explanation above your message from last week. You asked a good question, and I’m glad you gave me reason to articulate my answer. ... ... Bye.

Posted by: bob-graboyes-nfib | July 27, 2009 9:08 PM
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Thanks for your comments. You do realize of course, that other countries get better health care as measured by all the bottom line public health statistics (there are 16) and they do it at half the cost per person. They mostly have programs similar to Medicare. Are you saying that Americans cannot run Medicare as efficiently as they run their systems?

BTW, your predictions about Medicare are way off. Here is Uwe Reinhardt on the sustainablilty of Medicare :

"If "economic sustainability," then exactly what do people have in mind with that phrase? During the past 4 decades or so, the long-run, smoothed average annual growth rate in real (inflation-adjusted) GDP per capita has been about 2%. Suppose that fell to only 1.5% for the next four decades. The current average real GDP per capita of about $40,000 would then grow to about $72,500 by 2050 in constant-dollar terms. Medicare now absorbs about 3% of GDP, leaving a non-Medicare real per capita GDP of $38,800. It was estimated by the CBO about a year ago that Medicare will absorb about 9% of GDP by 2050. Let’s make that 10%. At these numbers, the non-Medicare real GDP per capita available to today’s little critters who will run America in 2050 will still be close to 70% larger than is our current non-Medicare GDP per capita."

Posted by: lensch | July 26, 2009 9:46 PM
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Hi Lensch ... Good to know we can agree. I do enjoy your posts. I said we needed LARGER risk pools, not THE LARGEST. Think Goldilocks. And, no, I don't underestimate the difficulty of changing physician behavior. I've taught MDs at a medical campus for 10 years. I know 'em and love 'em.

As for Medicare-for-All. ... In 1965, President Johnson predicted Medicare would cost $500 Million per year ($3.5 billion in 2009 dollars), and he considered that amount "a train wreck." This year, Medicare will actually spend over $500 Billion – 143 times as large as LBJ's prediction. (It'll double again in around 10 years.) Medicare’s $30 to $60 trillion long-term funding gap is on course to consume the entire federal budget by mid-century. To repeat, Medicare’s rigid, wasteful, antiquated reimbursement structure rewards doctors for poking, prodding, cutting, and slicing, but not for getting patients healthy or keeping them that way. Some estimates place fraud at 12% of Medicare payments; Google "Medicare" and "fraud" together and you get 1,360,000 hits. You'd like Medicare to swell to almost 7 times its current size and control healthcare for all 305 million of us? No thanks.

Stay well, my friend.

Posted by: bob-graboyes-nfib | July 26, 2009 6:41 AM
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Today, I agree with much of what you say, Mr Graboyes, although I think you underestimate the difficulty of getting physicians to change their practices. Let me point out that you ask for larger pools, but the largest pool would only come from a single payer system.

I also think that perhaps because of ideological blinders you omit the most obvious way to help small business which is to take the burden of health care completely off their backs. HR676, Medicare for All, would do this while costing us no more than we are now spending because it would pick up the $400 Billion a year wasted by private insurers' high overhead and compliance costs. Of all the bills out there, Hr676 would benefit small business the most.

Wouldn't you help us support it?

Posted by: lensch | July 24, 2009 3:18 PM
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